What to Watch

Oil Steady Amid Pipeline Outage, Decline in U.S. Stocks

Investors continued to bet on crude’s rising fortunes Wednesday as oil prices held steady, propped up by an ongoing outage of a North Sea pipeline and data showing a decline in U.S. crude inventories.

 

Brent crude, the global benchmark, was mainly flat at $63.81 a barrel on London’s Intercontinental Exchange. On the New York Mercantile Exchange, West Texas Intermediate futures were trading up 0.38% at $57.78 a barrel.

 

The Forties Pipeline System in the North Sea closed down last week due to a hairline crack, stopping the flow of 450,000 barrels of oil a day.

 

Meanwhile in the U.S., the American Petroleum Institute, an industry group, said late Tuesday that U.S. crude supplies had come down by 5.2 million barrels in the week ended Dec. 15.

 

“The API is the reason why the energy complex is slightly up this morning,” said Tamas Varga, an analyst at brokerage PVM Oil Associates Ltd. in a note.

 

Energy News

Shell, Eni Face Italian Charges Over Massive Nigerian Bribe

An Italian judge Wednesday indicted Royal Dutch Shell PLC, Claudio Descalzi, the chief executive of the Italian oil and gas company Eni SpA and other industry executives on corruption charges connected to a 2011 deal to acquire drilling rights off the coast of Nigeria

 

Italy’s Eni Has Started Producing From Giant Egyptian Gas Field

 

 

Eni said Wednesday it had begun producing gas from Egypt’s offshore Zohr field, the largest gas discovery ever made in the country. Located in the Shorouk Block north of Port Said, Zohr was first discovered in August 2015.

 

“If the nuclear plants go down, in the long run the price of electricity is going to go up”

Jeff Van Drew, New Jersey state senator

 

 

China to Shake Up Global Market With Yuan-Based Oil Futures Contract

 

China, the world’s biggest importer of crude, is preparing to launch its own yuan-based oil futures contract, a move set to shake up the 96 million barrel-per-day global crude market currently dominated by trading in London and New York. No official trading start date has been set, but analysts in China say they expect it to begin late this year or in early 2018.

 

Big Number

2014

Most Russian oil firms pulled out of Crimea after the U.S. imposed sanctions over Moscow’s annexation of the region from Ukraine in 2014 and threatened punitive measures against any firm operating in the area. Still one of Russia’s biggest oil companies, Tatneft, operated fuel stations in Crimea up until September, reports Reuters.

 

FutureCurve

Today: The U.S. Energy Information Administration releases U.S. production figures.

 

Friday: Oil-services firm Baker Hughes Inc. releases its count of active drilling rigs, a bellwether for production in the U.S. oil industry.

 

Energy Journal Exclusive

Angolas’s Quest for Power

 

Angola’s Minister of Water and Energy João Baptista Borges is one of few ministers that has held on to his post under the new administration of President João Lourenço, Angola’s first new leader in 38 years.

 

Mr. Borges, 53, has overseen an electrification effort that led to 35% of Angola’s 29.3 million population having access to power as of 2016, up from 17% in 2005, according to the International Energy Agency.

 

During his tenure Angola contracted General Electric to build turbines for Angola’s first liquefied-natural gas power plant and separately a gas processing unit.

 

Big oil firms such as Chevron Corp., BP PLC, and France’s Total SA hold a stake in the processing facility.

 

Electrification efforts in sub-Saharan Africa outpaced population growth for the first time in 2014, said the IEA in a report. Still, the agency projects that around 675 million people – 90% of them in sub-Saharan Africa – will remain without access to electricity in 2030.

 

The following are edited excerpts from an August interview in Portuguese with Mr. Borges:

 

WSJ: How has Angola financed its energy infrastructure?

 

Borges: China’s financing is the most accessible. We have a good commercial relationship with China. But we also have financing from Spain and other countries. In our estimate, to double the access to electricity and reach our 2025 goals, we need about $30 billion.

 

WSJ: What’s Angola’s energy mix right now?

 

Borges: Hydropower is about 65% and 35% is diesel, but our energy matrix is changing with the construction of new hydropower facilities and the natural gas power plant in Soyo.

 

WSJ: What are you doing to attract investors?

 

Borges: We need to reach our objectives of 9 gigawatts of installed capacity [by 2025]. The state needs to find partners to investment in the production.

 

[Investors can] come, we identify the project, discuss a power purchasing agreement…and depending on the volume of the project they can get a guarantee from the government.

 

It’s important to find solutions that can mitigate and reduce the risk that the investors see in investing in Angola.

 

Reporter’s Notebook

U.S. gasoline prices have fallen by 11 cents a gallon over the past month to $2.43/gallon, providing an early Christmas present for drivers. But don’t get carried away, said Patrick DeHaan at GasBuddy. “It’s hard to be completely happy with gas prices dropping slightly in recent weeks when we’re going to see the most expensive Christmas at the pump in years,” he said. GasBuddy projects the national average gas price this Christmas will be $2.39 per gallon, the priciest Christmas since 2013 when it stood at $3.26. Gas prices on Christmas day in 2014, ’15 and ’16 were $2.38, $2.00 and $2.28, respectively, according to WSJ reporter Dan Molinski.

 

Despite plunging U.S. oil train traffic, one often overlooked route is gaining more traction. Shipments from North Dakota’s Bakken shale to the West Coast rose 6% in the January to September period, with California and Washington terminals taking 36.5 million barrels. That’s nearly 1 million barrels of oil a week. Overall U.S. oil train traffic is down 41% in the first nine months of the year, and the once popular run from North Dakota to refineries on the East Coast is down 61%. West Coast oil imports from foreign producers have inched down so far this year, with OPEC sending 7.5% less crude in the first three quarters. But non-OPEC producers are sending more. The biggest gain in market share is Russia, which is sending 36% more year-on-year, at an average 46,000 barrels a day, according to WSJ’s Deputy Texas Bureau Chief Lynn Cook.

 

The U.S. Department of Energy is throwing $12 million at research geared toward improving the accuracy of solar forecasting technologies. Knowing precisely how much electricity solar installations will generate, Energy Secretary Rick Perry said, is “becoming more important as the solar industry continues to grow, and will work to ensure that solar contributes to the reliability, affordability, and resilience of our nation’s electric grid.” Three of the projects being funded will partner with power grid operators, including in California and Texas, to study how solar forecasting technologies can be integrated into grid planning and operation systems, writes WSJ reporter Erin Ailworth.